Depriciation problem

20 February 2012

purchase price of machine 150000.installation harges 50000,residual value 81920,useful life 4 yrs,the amount of depriciation under wdv method will be

a).40000 b).32000

c).25600 d).20480

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Peter Sequeira (*) (81 Points)
Replied 20 February 2012

Step 1: Find rate of depn. using the following formula

R= (1 - n s/c ) x 100

Where R = Rate of Depreciation (in %),

n = Useful life of the asset (in years)

s = Scrap value at the end of useful life of the asset

c= Cost of the asset

N.B. i cant get a square root sign. the formula must read 'n' root of 's/c'

using the above formula. u'll get the rate of depn as 20%.

Step 2: Apply rate in question

Add installation chgs to the cost and calculate depn @ 20%. You'll get 40000 as depn for the year.

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